King of Judicial Patronage
... & Friends
EASTSIDE EXPRESS: APRIL 28, 1977
by John C. Klotz
Bernard H. "Beau" Lange, a free-wheeling entrepreneur with
links to prominent political and business interests has been
documented as the recipient since November 1974 of more than $100
million in lucrative mortgage receiverships with potential
earnings to him of $1,3 million. In the past 2 years, Lange and
his nephew, Stephen Gorelick, have been appointed to administer
more than 200 properties in foreclosure proceeding seventy
percent of the receiverships came from ten New York City judges.
These facts emerged from a joint three month investigation of
courthouse records in five boroughs by this writer and Stanley
Pinsley of WNEW TV Channel 5. When confronted last week by
Channel 5's Gabe Pressman, Lange claimed that his sudden good
fortune was the result of "seven years of hustling," circulating
his resume to banks and judges, and not the fruit of any
political connections.
However, a great many underlying circumstances indicate that
a - number of judges, lawyers, banks, and insurance companies have
questions to answer in accounting for Beau Lange's
startling success.
Lange freely admits to knowing all the judges and big
politicians. Among his associates are insurance tycoon Neil
Walsh, New York City's Commissioner of Special Events; Patrick
J. Cunningham, former State Democratic Chairman and still Bronx
party boss; and Cunningham's man at City Hall, Deputy Mayor
Stanley Friedman. Lange, a former Bronx resident, is an unpaid
deputy commissioner to Walsh in the Department of Special Events.
Another acquaintance is Roy Cohn, former aide to the late
Senator Joseph McCarthy. Cohn is the son of a prominent Bronx
political family, and knowledgeable observers have long held that
Cunningham, Walsh and Cohn were a triumvirate that made all the
important decisions for the Bronx machine.
Among Lange's Manhattan associates is former Tamany Hall
leader Carmine DeSapio.
The receiver game.
State Supreme Court Judges possess virtually unlimited
discretion to appoint receivers for real estate that is subject
to mortgage foreclosure. The receiver is an officer of the court
who is charged with managing the property during the foreclosure
proceedings. For his services, the appointee is legally entitled
to a commission of five per cent of the rent he collects.
Receiver appointments have been a tradition source of patronage
to favored politicians and machine clubhouses.
But the receiver's commission is only one slice of the
patronage pie in foreclosure cases. The receiver must post a bond
with the court to insure the proper performance of his duties.
Lange has steered - bond business to Neil Walsh. Next, the
receiver may hire a managing agent to actually handle the
property for him, and the agent's commissions may be 7 percent
of the rent roll or even more.
Finally, the receiver and his agent, in managing the property,
must purchase a host of supplies and services. A big time
receiver like Lange, with an accumulated rent roll of $30 to $40
million to spend, is an important customer of oil companies, plumbing
concerns, painters, and many other similar enterprises. These
purchases can also be administered - as a form of patronage.
If Lange's claim is correct, that his rise.to wealth as a
receiver is a function of his seven-year "hustle," then he must
be given high marks for persistence. For most of the last seven
years, his hustle showed meager results. in 1972, Lange cadged
just two receiver appointments in Manhattan and the Bronx worth
only $2,738 in commissions. in 1974, the results were even worse
- one appointment and a $2,054 fee. The first ten months of 1974
showed slight improvement-two receiverships and an income of
$5,483.
Lange's career turned sharply upward in November 1974, a scant
two weeks after Carey's election as Governor. With Patrick
Cunningham's accession to the State Democratic Party
Chairmanship imminent, Lange was appointed receiver in seven
Manhattan cases, surpassing in one day the results of the
previous three years. A week later, his nephew Gorelick,
received two Bronx appointments. And within a few weeks after
that, Lange garnered four more Bronx appointments under the name
Bernard H. Lagowitz, the family name he supposedly abandoned
eleven years ago.
A Tale of Two Names
Lange has said that there was nothing wrong with using two
names, that the appointments came that way because that's how the
judges in the Bronx knew him. However, the circumstances
surrounding his appointment as receiver of two Harlem buildings
suggest something else.
According to bonds filed in the New York County Courthouse,
Judge Harry B. Frank on February 14, 1975, appointed Bernard H.
Lagowitz, of 2455 Sedgwick Avenue, the Bronx, as receiver of an
apartment house at 409 Edgecomb Avenue, Manhattan, and Bernard H.
Lange of 201 East 35th Street, Manhattan, as receiver of an
apartment house at 270 Convent Avenue. In both actions the
plaintiff was the Metropolitan Life Insurance Company; the
principal defendant was the Antilean Holding Company; the bonding
company was the Safeco Insurance Co.; and the same officer of
Safeco countersigned the bond.
A casual observer of - the public- record would conclude that
two different individuals had been named as receiver in the two
cases but the record is misleading.
Of the 202 receiverships discovered by Pinsley, 136 were
appointments to Lange Lagowitz worth more than $1.3 million in
potential commissions. And 66 were Gorelick appointments with
an income potential of nearly $152,000. It is impossible to say
how much the two did realize from the receiverships, because in
some cases receiver reports have never been filed despite the
fact that the properties The two receivers appear to have been
sold.
The two receivers appear to function as one. Gorelick uses the
same multiple addresses and the same telephone numbers as Lange.
He frequently notarizes Lange's affidavits, and they share office
space with an attorney who has time to time represented
plaintiffs in actions where Lange has been named receiver.
But even if you separate the two receivership domains is
far and away the number one receiver with twice as many as the
number two receiver, Gorelick. And Gorelick has several times as
many receiverships as the next highest, 79 year-old Frederick
Katz, who has at times functioned as Lange's attorney.
A large number of Lange's appointments are concentrated among
a handful of judges. Of 189 appointments where the appointing
judge has been identified, 131, or 70 percent, were accounted
for by ten judges. The remaining 58 were divided among 33 others.
Not surprisingly, the leading Lange-Gorelick appointer, with at
least 24 appointments, is Supreme Court Justice Joseph Di Fede,
who was a Bronx district leader before he ascended to the bench.
The reverences in the resume.
Few copies of the resume hat Lange hustled around can be
found. in the court files. But one copy, plucked from a Bronx
proceeding, sheds important light on Lange's milieu.
Listed as Lange's clients are, among others, the American Bank
& Trust Company and GIT Mortgage Investors. The collapse of
American Bank & Trust was reportedly the fourth largest in U.S.
history. Before its collapse, the bank had been criticized for
being among the most political in New York. It provided a
directorship and the finance committee chairmanship to Abe Beame
after his 1965 mayoralty loss to John Lindsay. And in 1973, it
loaned its mailing list to then Comptroller Beame's successful
mayoralty bid.
In 1976, the bank became embroiled in the controversy swirling
around then State Chairman Patrick Cunningham. The State
Commissioner of Motor Vehicles, testified before a Grand Jury
that Cunningham had asked him to transfer a $40,000 interest-free
departmental account to a Bronx branch of the bank. At the same
time, Cunningham reportedly was drawing a substantial legal
retainer from the bank.
GIT had many financial links to the American Bank & Trust.
When the bank collapsed, a G1T alumnus, who was another Lange
reference, was bank president. Another client on Lange's resume
is the Dollar Savings Bank, of which the chief executive is Henry
Waltemade, another Cunningham intimate.
The Bahamas Connection
Further illumination of Lange's antecedents are provided by a
group of resume references that include the Princess Hotel chain
and other enterprises owned by D. K. Ludwig, according to the
Guinness Book of Records one of the world's two billionaires.
Ludwig, whose interests run to oil tankers and real estate
development, was Howard Hughes' last landlord, as the owner of the
Acapulco Princess.
Lange worked for various Ludwig enterprises in the Bahamas. He
and Gorelick now have offices in the Burlington House at 1345
Avenue of the Americas, of which Ludwig is part owner. Adjacent
to their third-floor office is the headquarters of National Bulk
Carriers, Inc., another Lange client and the principal corporate
vehicle of the Ludwig empire.
A Good Steward
Lange answers questions about his burgeoning empire by
saying the banks are satisfied with the results of his
management. However, it is impossible to draw any conclusion about
Lange's proficiency as a receiver from an examination of court
records. Many Lange accountings are long overdue, some by as much
as a year. Accounts that have been filed are with but few
exceptions skimpy and uninformative. One key Queens record book has
been locked in a safe, and court clerks refuse to produce it for
public inspection. As much as $30 million may have passed through
Lange's hands and virtually nothing is known of where it went.
Offsetting Lange's claims of bank satisfaction are the
complaints of some of the defendants and prior owners in
buildings where Lange has been named receiver. Real Estate
speculator Richard Maidman has been fighting a running battle
with Lange and just recently obtained orders requiring Lange to
post bonds nearly half a million dollars higher than previously
required in actions involving foreclosures on former Maidman
holdings.
In a Bronx case, another defendant - moved to disqualify Lange
when be attempted to install an officer of the plaintiff as his
managing agent. Such a move would, call to question the
independence with which a receiver is supposed to exercise his
trust.
Moreover, at least one bank official has complained about
Lange's being eight, months overdue with a receiver's report but
shrugs it off with the comment, "What'ya going to do?"
But whatever the allegation's of discontented litigants,
the fact remains that Lange has accounted for his vast empire in
only' the most perfunctory way. The burden of compelling proper
accounting falls on the judiciary whose largesse created the
Lange empire in the first place.
For in the end, the story of Bernard H. "Beau" Langowitz-Lange
returns to the political-financial-judicial establishment that
dominates the courthouses. Lange claims that he has been a good
steward, that, although he knows all the important politicians
and judges, he has earned his good fortune by just "hustling"
around with his resume.
You can believe that. You can also believe in Santa Clause and
the Easter Bunny if you want to.
